BEYOND TAX REFORM By Marcel Fahie

Conversations, discussions, arguments, debates, controversies and verbal warfare focused on economic, financial and fiscal issues have occupied centre stage in Anguilla’s national political contest for the hearts and minds of the people of Anguilla. The process has been particularly vocal on issues relating to the Anguilla Government’s financial condition and policies and strategies to adjust and stabilize the national budget.

Quite recently, last week Thursday evening, August 25 to be exact, another installment in the saga was played out. This was at the town hall meeting organized by the Government of Chief Minister Hubert at the Rodney MacArthur Rey Auditorium, at which the Government’s tax reform consultant, Mr. Ved Ghandi, made a presentation on tax reform focused on the case for introducing a goods and services tax (GST) (better known as value-added tax, VAT) to provide the core of a reformed tax system for Anguilla in the future.

The focus, on previous occasions and during particular intervals in the past year and a half, has been on actions to balance the budget to meet the Government’s commitment to achieve a balanced budget by 2013. The actions have taken the form particularly of measures to raise additional tax revenue to meet the revenue targets necessary to cover the costs of providing the services of the Government. Nothing is wrong with this in principle. Governments have to undertake the stabilization and rebalancing of their budgets in good economic and financial times and even more so when economies and their communities are experiencing hardship.

I do have an issue however with the political opportunism and lack of genuine concern for the short, medium and long term balanced growth and prosperity of Anguilla and Anguillians. This is portrayed by the AUM politicians and others who are driven mainly by personal ambition and goals, rather than selfless service to the people of Anguilla. With an opportunistic approach and a readiness to posture politically for short term gain, politicians and their handlers are able without batting eyelashes or skipping beats to switch their positions in a wink depending on which side of the political and governmental divide they find themselves.

That is why the taxation wolf that the AUM shouted from the villages and hamlets of Anguilla would be unleashed on Anguilla by the AUF has now been unleashed on Anguilla by the AUM Government. But that is not the really sad part. The really sad aspect is that they who responded loudly and affirmatively to the claims made by the AUM politicians and believed their every falsehood and misrepresentation now find nothing wrong, nothing out of place with the AUM Government undertaking the very actions about which they warned the electorate and convinced many to vote against the AUF and vote the AUM into office.

What would have caused them to take to the streets, had the AUF been in office and enacted the tax legislation and tax increases that they have introduced, is now being stoutly defended by the AUM stalwarts. It seems that what is key in all this is the messenger. So if some people do not support and do not like the political messenger, nothing they do or advocate will seem as having merit. Or the politician, in the crooked and ultimately negative strategy of fooling the people rather than being open and honest on issues that go beyond narrow partisan politics, find nothing wrong in saying tax increases are terrible today and must be resisted tomorrow and then tomorrow saying that we must have the increases in order to run the Government.

I am afraid that we have not matured politically as much as we should have and our people are still easily fooled. Ask all those who are now regretting their votes for AUM candidates and putting them into office. But we have a democracy and we must respect the decision of the people while offering responsible criticism. In this vein, it is essential that the debate now being opened up about tax reform be taken beyond tax reform.

The Government must publish and inform the public about its overall fiscal policy, that is its overall policy short, medium and long term for changes in the tax system (tax reform), but equally its policy on expenditure, both recurrent and capital, on reserves, on borrowing, on the role of fiscal policy as a tool to help the government in managing economic growth. The Government must tell us of its policy and strategy for minimizing cost of living impacts of a value added tax. It must tell us what it intends to do about improving efficiency and productivity in the public service and in maximizing value for money.

The Government must show us the link between fiscal policy and economic growth and development policy to satisfy us that it will not choke off the opportunity for restoring growth and development through a narrow focus on and interpretation of tax reform.

The Government must look at this time beyond tax reform.